N.C. regulators want answers from Duke Energy Chief Executive Jim Rogers about who made the decision to replace Bill Johnson, what impact the departure will have on the merger and who Duke thinks will pay for Johnson’s $45 million “golden parachute.”

N.C. Utilities Commission Chairman Ed Finley sent a letter to Progress Energy Carolinas lawyer Len Anthony by email Monday outlining the topics the commission wants to talk to Rogers about at Tuesday’s hearing. The letter was sent to Anthony because he has been the primary contact for the commission throughout the merger hearings.

“The commission reserves the right to add to or subtract from this list,” Finley writes Anthony. “However the commission wishes to convey this list to you at this time.”

Johnson, former CEO of Progress and briefly CEO of Duke, resigned almost immediately after the $32 billion merger closed July 2. Duke signed agreements with Johnson to prevent disclosure of the reasons the Duke board had for accepting Johnson’s resignation and installing Rogers as the CEO once again. The company has steadfastly declined to answer questions in public about the merger.

Leverage

But the commission may have more leverage than some questioners. It has the authority to revoke its approval of the merger, although that almost certainly won’t happen. But Duke must answer to the commission on a host of regulatory issues, including rate increases.

On the “potential topics for questions” from Finley are the ones everyone is asking: Who made the decision to replace Johnson, when it was made and what were the reasons for Johnson’s departure?

But it has several specific questions that get to what the impact could be on the merged company, and thus on its customers.

The commission wants to talk about how Progress employees see their future at Duke now and who is on the team that is supposed to meld the two companies. It also asks for more information about the executive management team.

Cost recovery

The commission wants to know the potential impact if Standard & Poor’s decides to downgrade Duke’s credit rating and whether any of that could impact Duke’s ability to achieve the $650 million in merger savings it has promised to customers in the first five to six-and-a-half years following the merger.

That’s “commissionese” for “Where do you plan to get the up to $44.7 million Duke may have to pay to Johnson?”

The commission has been adamant about not allowing Duke to pass on merger costs to customers. The commission and its public staff, assigned to protect utility customer interests, have worked hard to make sure that expenses related to achieving the merger get paid by shareholders.

Shareholder costs

Duke recently agreed to bear all the costs of severance packages associated with the elimination of 1,860 positions at the newly merged company and at least the initial costs for new transmission upgrades.

All of that could put shareholders on the hook for about $230 million more in merger costs than was originally expected. Add Johnson’s severance into that, and the increased cost to shareholders nears $280 million.

The hearing will be 2 p.m. Tuesday in the commission’s hearing room at its office on Salisbury Street in Raleigh.